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Swedish Tax System No Model: Expert

Posted October. 16, 2006 03:09,   


In Sweden, there are a lot of people who don’t get a job on purpose and just do housework even though they received higher education.

The Swedish pay two-thirds of their income as taxes. It means that if they work from Monday to Friday, they could get money only from work done from Thursday afternoon to Friday.

The unemployment rate is increasing as more and more people think that they don’t have to work because they can get unemployment allowance even if they don’t work.

Bjorn Tarras-Wahlberg, the secretary of general of the World Taxpayers Association, who is from Sweden, said in an exclusive interview with Dong-A Ilbo on October 13, “Due to this kind of atmosphere, the right-wing party which promised a tax decrease won a general election this time. Sweden is not a welfare model for Korea to follow.”

He pointed out that more than 60 percent of income taxes, 2.5 percent of property taxes, and high unemployment decided the result of the Swedish general election. He leaves Korea on October 16.

-What brought you to Korea this time?

“I came to Korea to participate in the Asia-Pacific Tax Policy Forum and the Asia-Pacific Taxpayers Union held from October 12 to October 15 by invitation of the Korea Taxpayer’s Association.

-What do you think is the reason of the right party’s winning in the recent Swedish general election?

“The people who have to pay a lot of tax are not happy. The western society enhanced productivity, but failed to increase employment. Sweden, with huge taxes, couldn’t reduce the unemployment rate. That is because the people thought they would rather stay home. Sweden is not a good model for Korea at all.”

-The Korean government used to grant benefits such as tax relief to families which have no children or have only a few. But as the low birth rate turned into a problem, they are trying to reduce taxes for those who have many children.

“I think that is a good method for dealing with the low birth rate. However, the problem is that households with many children are taking away benefits for the few. It is not a good solution to reduce one side’s benefits and increase benefits for the other with them.”

-Korea plans to increase the property tax rate up to one percent. What do you think about the property tax?

“The property tax is very bad because it is a tax for unrealized income. You cannot sell your house’ rooms or bricks in order to pay tax. Actually, high property tax was one of the reasons for the left’s failure in the Swedish general election. The right wing promised to reduce the property tax substantially.

-What kind of problems could occur when the property tax rate is high?

“Usually, tax targeting the rich could easily lead to a burden on the ordinary people. Especially, the property tax is highly likely to increase a burden on the ordinary people as it could be levied in other forms such as a rent fee. In Korea, retirees who own only one house should be given consideration, first of all.”

-What advice can you give to the Korean government?

“As high tax could slow down economic growth, it is better for Korea to reduce tax and put more emphasis on the economic growth than on the welfare. It is of the most urgent necessity to make an environment for the welfare with the economic growth.”

Secretary of General Bjorn Tarras-Wahlberg was a vice-president of Ericsson Telecom in Sweden from 1984 to 1985 and worked as an adviser to the World Bank. He established the World Taxpayers Association in 1988, was its chairman until 2004 and has been working as its general secretary since then.